According to RBI Governor, the AT1 bond Economy is still surprisingly Robust
Shaktikanta Das, Governor of the RBI Reserve Bank of India, has defended the write-off of Yes Bank’s extra tier 1 (AT1) bonds, claiming that the ecosystem is healthy and is part of Basel III rules. As Yes Bank suddenly collapsed in March, the RBI asked that a consortium led by the State Bank of India take over. As part of the agreement, the lender’s AT1 bonds worth about INR83 billion ($1.13 billion) were totally written off; however, the move was challenged by a group of investors.
Although the destiny of his move to totally write off Rs 8,300 crore of Yes Bank’s outstanding additional tier 1 (AT1) bonds as part of its bailout is being decided by the Supreme Court, RBI Governor Shaktikanta Das justified the debt instrument as globally valid on Thursday. The term “electronic commerce” refers to the sale of electronic goods. And that is part of the Basel III laws, which we have also embraced in our country. “And there’s really nothing else I’d like to say about this,” Das told reporters at the regular post-policy press conference.
“When banks issue such bonds, the terms and conditions are clearly stated, and clients, who are largely ultra-high total wealth individuals, are expected to study the terms and conditions.”
As Yes Bank stood at the edge of failure in early March 2020, the RBI urged a partnership of nine banks headed by SBI to acquire over the bank, which was led by Rana Kapoor. One crucial demand of the aid was that the private sector lender’s AT1 bonds, representing approximately Rs 8,300 crore, be totally written off.
The RBI approach, however, was challenged by an investor consortium in the Bombay High Court, which last month overturned the RBI verdict. Despite this, the bank and RBI went to the Supreme Court, which has yet to hear the plea.
Despite this, the bank and RBI went to the Supreme Court, which has yet to hear the plea. Nippon Mutual Funds, Barclays, , Franklin Templeton, 63 Moons, and others are big investors in these bonds.
Regarding the rupee, Das stated that during the G20 summit in Bengaluru, the RBI displayed several parts of our digital payments, along with the CBDC, which drew a lot of attention.
“In fact, an important figure from the global financial sector came so far as to compliment our CBDC design, saying the only element he lacked in the e-rupee is the fragrance of a new currency note.”
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